Q. Spread Bets vs. Options on Forex

[Trevor2522]

I see that IG Index offers both spread bets and daily/weekly options on forex, plus some exotics like bungee bets.

My question is : when would a day or swing trader use spread bets, and when might he use options? I presume spread bets are by far the most popular, if only for the clarity and simplicity?

Also, if trading an option, how does one best select the floor level (of the 18 levels offered)? Is it basically down to the width-of-stop equivalent, i.e. the amount of money one is prepared to risk? Thanks for any advice.

 

[ofurbaldur]

Unless you have a very good experience and understanding on options and options calculations I would stay away from options.

Options can be very handy in many cases but then again keep in mind that very high numbers of traders loose money in options. Even investments banks, hedge funds and warren buffett have made a massive loss.

You are going to know your maximum loss.

Can be good when you can not time your trades easily.

Many market neutral strategies.

Think if you where to use options it would make more sense to do it in the actual market not via spread betting.

Just remember most people loose in options.